Beijing, Feb 15 (IANS) China’s foreign trade slumped in January, with both exports and imports slowing at a faster-than-expected rate due to weak global demand, customs data showed on Monday.
Exports in yuan-denominated terms dropped 6.6 percent year on year to 1.14 trillion yuan ($175 billion), slowing from 2.3 percent growth last month, Xinhua reported.
Imports declined 14.4 percent to 737.5 billion yuan, worsening from a four percent slump last month, according to the General Administration of Customs (GAC).
Total foreign trade value in January edged down 9.8 percent year on year to 1.88 trillion yuan.
The monthly foreign trade surplus widened 12.2 percent year on year to a record high of 406.2 billion yuan in January, up from 382 billion yuan a month earlier.
The fundamental factor behind Monday’s disappointing figures has more to do with the overall lack of external demand rather than changes in exchange rates, said HSBC.
Falling commodity prices continued to weigh on import growth. Crude oil imports declined 4.6 percent year on year in volume while the average import price dived 36.4 percent.
Import volume of coal and steel, two sectors that have the most significant overcapacity problems, dropped 9.2 percent and 19.6 percent respectively.
The slump in trade growth mainly reflects weakening investment demand as recent holiday retail sales suggested strength in domestic consumption, said Nomura, a Japanese financial service firm.
The slowing demand may come from weaker property investment and measures to reduce overcapacity.
Trade with China’s three biggest trade partners, the European Union, the US and the Association for Southeast Asian Nations (ASEAN), all dropped around 10 percent, data showed.
Exports and imports by state-owned companies were among those badly hit, diving 15.7 and 25.7 percent year on year respectively, while private firms reported about one percent increase in both exports and imports.
In a brighter note, the leading index for China’s exports stood at 31.7 in January, the first time it increased from the previous month since February 2015, signalling less export pressure in the second quarter of 2016, the GAC said.
In dollar-denominated terms, China’s exports fell by 11.2 percent from one year earlier in January, worsening from December’s 1.4 percent decline. The import decline also widened to 18.8 percent.
As a weak external picture is likely to persist, a package of policy stimulus directed at boosting domestic demand including more aggressive monetary and fiscal easing, will be more effective at stabilising growth and expectations in the coming months, HSBC said.